The steel industry is braced for an increase of up to 50 per cent in the contract price of iron ore next year as a result of strong demand from China and lagging supply, industry executives and analysts have warned.

Mining companies are struggling to increase iron ore output in Australia, the world’s biggest exporter, while the quality of Chinese domestic iron ore production fails to improve. In addition, India’s government has imposed export tariffs to keep its local steel industry well supplied.